Cheaper, Dec-34 Supply & US Tsys Pressure

ACGBs (YM -5.0 & XM -5.5) are cheaper and just above Sydney session lows. Given the absence of significant domestic data on today's calendar, local participants appear to have been guided by US tsys NY close yesterday and ongoing developments in the Asia-Pac session today. Cash US tsys are dealing ~1bp cheaper in today’s Asia-Pac session after yesterday’s bear-steepening. Benchmark yields finished 8-12bps higher on Tuesday after Fed Waller pushed back against aggressive rate cut expectations.

• That said, a lower level of demand that was seen at today’s auction of A$800mn of ACGB Dec-34 bonds, as highlighted by a lower cover ratio, weighed on the market in early post-auction trading. The initial reaction has however been unwound, with the cash line trading in line with pre-auction levels.
• Cash ACGBs are 4-6bps cheaper, with the AU-US 10-year yield differential 1bp tighter at +14bps.
• Swap rates are 4bps higher, with EFPs tighter.
• The bills strip is cheaper, with pricing -1 to -4.
• RBA-dated OIS pricing is 3-4bps firmer for meetings beyond May. A cumulative 44bps of easing is priced by year-end.